S&P 500 Nears Bear Market as Trump Tariffs Rattle Wall Street

Wall Street’s primary indexes plunged at Monday’s opening, with the S&P 500 teetering on the edge of a bear market, as investors fled to the safety of government bonds amid escalating fears over President Trump’s aggressive tariff agenda. The sharp drop, erasing over $5 trillion in market value since February, signals deep unease about the economic fallout from trade policies targeting Canada, Mexico, and China, pushing the benchmark index toward a 20% decline from its peak.

The S&P 500 fell over 3% at the opening bell, building on a two-day loss exceeding 10%. If this holds, it will confirm a bear market, a threshold last crossed in 2022, reflecting widespread investor pessimism.

The Nasdaq, heavily weighted with tech stocks, already entered bear market territory last week. Giants like Tesla and Nvidia saw steep declines, underscoring the sector’s sensitivity to trade disruptions and tariff costs.

Trump’s tariffs, including 25% on Canadian and Mexican imports and 34% on Chinese goods, have sparked retaliatory levies from Beijing. This tit-for-tat escalation threatens to choke global trade, a key driver of U.S. corporate earnings.

Investors briefly rallied on rumors of a 90-day tariff pause, pushing stocks up over 5% in minutes. The White House quickly dismissed these as “fake news,” triggering a resumption of the sell-off.

Treasury Secretary Scott Bessent has downplayed the chaos, calling it a necessary “economic detox.” Critics warn this tolerance for market pain could deepen a looming recession, a risk Trump has refused to rule out.

The Dow Jones Industrial Average also shed over 800 points, nearing correction territory itself. Blue-chip firms like Caterpillar slumped, hit by fears of shrinking machinery demand in a trade war.

Economists predict higher consumer prices and slower growth as tariffs ripple through supply chains. Goldman Sachs estimates a 5% hit to S&P 500 fair value, with earnings potentially dropping 2-3%.

Business leaders, from retailers to automakers, are reeling from the uncertainty of Trump’s on-again, off-again tariff tweaks. Companies like Nintendo have delayed U.S. product launches to assess the new costs.

Some Republicans privately fret over the levies’ impact, though few dare challenge Trump publicly. His insistence that tariffs will fund tax cuts has yet to calm jittery markets or skeptical analysts.

Commerce Secretary Howard Lutnick has doubled down, arguing tariffs will revive U.S. manufacturing jobs. Yet, with the S&P 500 down 17.4% from its February high, Wall Street remains unconvinced.

As stocks waver, the flight to bonds signals a broader retreat from risk. Whether Trump adjusts course or doubles down could dictate the market’s fate in the weeks ahead.